Expenditure Responsibility

About this collection: This NCFP Content Collection includes FAQs, rules and sample policies for the process of expenditure responsibility to ensure your grants to "non-charities" are for charitable purposes.

When a private foundation makes a grant to an organization that is not classified by the IRS as tax-exempt, it is required by law to ensure that the funds are spent for charitable purposes and not for private or political activities.

This NCFP Content Collection includes FAQs, rules and sample policies for the process of expenditure responsibility to ensure your grants to “non-charities” are for charitable purposes.

Please see the NCFP Content Collection on Audits,  Accounting, and Completing the 990-PF Form for additional information and resources.

Featured Resources

Expenditure Responsibility Rules for Private Foundations

Video
The legal staff at the Packard Foundation, Gates Foundation, Hewlett Foundation and Moore Foundation developed this free, resource, which covers the basic legal rules around expenditure responsibility. It takes less than thirty minutes to complete and features “Maya,” a program officer that helps participants through the course.

Funding Outside the Box: Expenditure Responsibility and Scholarships

Tool
This short case study introduces the concept and regulations related to expenditure responsibility and looks at the legal constraints around making international grants and scholarships. A helpful illustration for any family considering making an international grant.

Have We Properly Verified the Tax-Exempt Status of Our Grantees?

Article
Every grant award offers a potential risk that should be understood and properly mitigated. Providing grants to a charity that has had its tax-exempt status revoked — even unknowingly — can lead to the disbursement being considered a taxable expenditure, prevent foundations from meeting the annual 5 percent distribution requirement, and cause the …

Can Private Foundations Serve as Fiscal Sponsors?

Article
By Andras Kosaras, Associate, Arnold and Porter LLP Private foundations frequently receive grant applications from groups that are under the fiscal sponsorship of a section 501(c)(3) public charity.  But sometimes the request is for the private foundation itself to serve as a group’s fiscal sponsor.  Is a private foundation …

Grants by Private Foundations: Expenditure Responsibility

Report
When a private foundation makes a grant to an organization that is not classified by the IRS as tax-exempt, it is required by law to ensure that the funds are spent for charitable purposes and not for private or political activities. Find FAQs, rules and sample policies to ensure your …

Can We Make Grants to a Non- 501(C)(3) Organization?

Ask the Center
The short answer is, absolutely. Foundations are allowed to make grants to non-charities. They have to follow special procedures under Section 4945 that are called expenditure responsibility. The basic rule is that the fund have to be used for charitable purposes, not something else, but you can grant to 501(c)(4)s, 501(…

Sample Foundation Policies and Practices